Fitch Ratings revised upward its 2025 world growth forecasts to 2.4% from 2.2% in June, citing stronger 2Q data in China and the eurozone, according to its global economic output report (pdf). However, the agency warned that global activity is still set to slow sharply from 2.9% in 2024, with evidence of a US deceleration now emerging in hard data.

China’s growth projection was raised to 4.7% from 4.2%, helped by a weaker exchange rate, falling export prices, and fiscal easing that has cushioned exports from the US tariff shock. However, Fitch warned that domestic demand is softening and deflation is “increasingly entrenched.”

The eurozone outlook was also upgraded to 1.1% from 0.8% after better-than-expected 1H trade data, though Fitch cautioned that much of the strength reflected front-running US tariffs. With consumer momentum fading, the bloc is unlikely to expand in 2H, though German fiscal support should add some cushion in 2026.

While the US’ growth forecast was lifted slightly to 1.6% from 1.5%, this is still below trend and significantly below the 2.8% growth rate recorded last year. Fitch flagged weaker consumption and hiring as tariffs, rising inflation, and tighter immigration squeeze growth. Consumer spending has already slowed, job growth has decelerated, and more inflationary pressure is likely to kick in soon. Fitch expects the Fed to respond with two more cuts this year and three in 2026.

Tariffs are set to weigh on near-term growth…: Fitch estimates the average US effective tariff rate at 16% — among the highest in the world. While pass-through CPI has so far been modest, inflationary effects are expected to intensify later this year, further weighing on household incomes. “Greater clarity about US tariff hikes does not alter the fact that they are huge and will reduce global growth,” said Brian Coulton, Fitch’s chief economist.

… and into 2026: The agency sees global growth slowing to 2.3% in 2026, well below trend. Long-term bond yields in the US, UK, Germany, and Japan remain under upward pressure, reflecting concerns about supply and fiscal sustainability, while the European Central Bank is unlikely to cut rates further, limiting chances of a near-term USD rebound.

MARKETS THIS MORNING-

Early morning trading is mixed in Asia-Pacific markets today, with Japan’s Nikkei hitting a fresh high on the back of tech investment group Softbank’s shares rising nearly 10% since markets opened. South Korea’s Kospi is also in the green, but Hong Kong’s HSI and mainland China’s CSI are both trading down. Meanwhile, Wall Street futures are trading mostly flat, after the S&P 500 hit another all-time high at market close yesterday, while the Dow Jones closed down.

ADX

9,927

-0.3% (YTD: +5.4%)

DFM

5,923

-0.6% (YTD: +14.8%)

Nasdaq Dubai UAE20

4,747

-0.7% (YTD: +14.0%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

4.2% o/n

3.9% 1 yr

TASI

10,498

-0.3% (YTD: -12.9%)

EGX30

34,670

+0.8% (YTD: +16.6%)

S&P 500

6,532

+0.3% (YTD: +11.1%)

FTSE 100

9,225

-0.2% (YTD: +12.9%)

Euro Stoxx 50

5,361

-0.1% (YTD: +9.5%)

Brent crude

USD 67.58

+0.1%

Natural gas (Nymex)

USD 3.03

-0.1%

Gold

USD 3,682

0.0%

BTC

USD 113,954

+2.1% (YTD: +21.8%)

Chimera JP Morgan UAE Bond UCITS ETF

AED 3.62

-0.8% (YTD: +3.9%)

S&P MENA Bond & Sukuk

149.77

-0.1% (YTD: +7.0%)

VIX (Volatility Index)

15.35

+2.1% (YTD: -11.5%)

THE CLOSING BELL-

The ADX fell 0.3% yesterday on turnover of AED 869.3 mn. The index is up 5.4% YTD.

In the green: Aram Group (+8.2%), Abu Dhabi National Takaful Co. (+3.1%) and Abu Dhabi Ship Building Co. (+2.5%).

In the red: Ins. House (-7.7%), Abu Dhabi National Co. for Building Materials (-3.8%) and E7 Group (-2.7%).

Over on the DFM, the index fell 0.6% on turnover of AED 504.8 mn. Meanwhile, Nasdaq Dubai was down 0.7%.

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